The Federal Housing Finance Agency's announcement of salary cuts for Fannie Mae and Freddie Mac executives doesn't go as far as some would like.

The FHFA detailed a $500,000 cap on salaries Friday, in particular for the incoming CEOs of the government-sponsored enterprises. That remains above the federal pay scale and falls short of compensation caps in standing legislation, and includes deferred payments that boost potential pay to $30.73 million for the top 10 executives.

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Fannie and Freddie's chief financial officers are exempt from the base salary cap, meaning they'd make more than the new chief executives. CFOs Ross Kari and Susan McFarland will make $675,000 and $600,000, respectively, in 2012.

"We're going to try and fill these two positions at a very low wage rate, but we just don't think there's any chance on the others," Lawler said in an interview with HousingWire.

Three Freddie executives are also set to receive a raise, albeit at or below the $500,000 barrier.

These levels do represent a sharp reduction since the government took Fannie and Freddie into conservatorship. Compensation for the top 15 executives at each GSE is down 63%, according to the FHFA.

Members of Congress, however, weren't keen on the changes.

"That may (be) an appropriate level for the private sector, but as long as the GSEs live off the taxpayers, these companies are owned by taxpayers and their staff should be paid accordingly," Rep. Spencer Bachus, R-Ala., said in a statement Friday.

A House bill sponsored by Bachus would limit GSE executive pay at $218,978 for 2011. It passed the committee level in November.

Jeff Emerson, a spokesman for Bachus, said that bill could come up before a full House vote soon. Bachus called the FHFA's change "long overdue," but said it doesn't go far enough.

Another measure, attached to a House and Senate-approved congressional insider trading bill, would ban bonuses, while yet another puts Fannie and Freddie employees on a federal pay scale with a maximum $275,000 salary.

Both chambers approved separate versions, each with the GSE provision, in February, but have yet to reconcile the two measures.

Sen. Jay Rockefeller, D-W.Va., cosponsored the GSE amendment in the Senate and called the FHFA's move a "good first step."

"Even a $500,000 salary is too much," Rockefeller said in a statement. "Excessive executive pay at taxpayer-funded entities has already been going on for too long and must end — period."

The FHFA said any further salary reduction from its $500,000 benchmark or uncertainty around it would "heighten safety and soundness concerns."

"A sudden and sharp change in pay from these levels would certainly risk a substantial exodus of talent, the best leaving first in many instances," FHFA acting director Ed DeMarco said in a release. "A significant increase in safety and soundness risks and in costly operational failures would, in my opinion, be highly likely."

Legislators in Washington railed against executive pay at Fannie and Freddie during committee hearings in the fall, including before the House Oversight Committee. That committee, chaired by Rep. Darrell Issa, R-Calif., issued a critical report on GSE pay, calling executives "government-sponsored moguls."

"I'm encouraged to see that (the) FHFA took the Oversight Committee's recommendation to reevaluate the bonus structure for these executives," Issa said Friday in a release.

The $500,000 salary cap, however, only refers to bimonthly or weekly payments, according to FHFA documents. The pay structure includes "deferred payments," which the FHFA does not consider bonuses, delayed by a year for each quarter.

The top 10 executives can still earn that $30.73 million with deferred payments included, a 13% reduction from roughly $35.3 million in 2011. Executives ultimately brought in $30.1 million last year with these payments.

Deferred payments are subject to reductions based on conservatorship and personal performance, as well as continued employment up to Jan. 31 2014. Early-exit provisions make up 70% of deferred salary.

The FHFA included that provision to encourage executives to stay, Lawler said.

"This is an unusual pay structure that's designed for a very unusual situation," Lawler said. "It doesn't look 100% like the private sector, but it certainly isn't the government either."

Charles "Ed" Haldeman and Michael Williams, Freddie and Fannie's outgoing CEOs, could earn up to $5.4 million in 2012, including $900,000 in base salary. Haldeman, however, recently asked not to receive $2 million in incentives tied to 2009 and 2010, according to a regulatory filing and first reported by The Wall Street Journal.

But both have said they'd leave before year-end, with $2.88 million in deferred salary tied to retention reductions.

Commentary

With the recent turnover in leadership at the Federal Housing Finance Agency, we may be standing at the precipice of great change in the government’s role in supporting the mortgage market through Fannie Mae and Freddie Mac.